Saturday, August 29, 2009
7:18:38 PM EDT

Wall Street, Healthcare, & Metals

by
James Brown

Why We Like It:
Technicals in GS are mixed but I think the stock could surprise traders with another move higher. Shares have been consolidating sideways under the $166.00-166.50 zone last week. I'm suggesting readers open small call positions (smaller than our normal trade size) at $166.75. If triggered our first target is $179.00. FYI: The Point & Figure chart is bullish with a $228 target.

Suggested Options:
This could be a quick two or three week play. Aggressive traders can use September calls, which expire in three weeks. The rest of us can trade October calls.

Why We Like It:
When Congress comes back from its summer recess and it becomes more apparent that the government-run healthcare bill is dead then private health insurance stocks could soar. UNH already has a bullish bias and the Point & Figure chart has a triple-top breakout buy signal with a $45 target.

I am suggesting a trigger to buy calls at $30.55. If triggered our first target to take profits is $34.50. Our second target is $37.50. My time frame is about eight weeks.

Suggested Options:
I am suggesting the October or December calls. Options are available at $1.00 strikes but $34s are the highest Octobers currently available.

Why We Like It:
VMI is a Nebraska-based metal fabricator. The stock has been showing relative strength. We want to buy calls on a dip at $82.00 (actually anywhere in the 82.00-80.00 zone). We're going to try a tight stop loss at $79.45. If triggered at $82.00 our first target is $88.00. I'm setting a second target at $94.00 but that might be a little too optimistic. Currently the Point & Figure chart is bullish with a $104 target.

Suggested Options:
Our time frame is several weeks so I'm suggesting the October calls. Readers may want to trade Decembers since they have more open interest.